Sri Lanka's investment promotion minister has given notice of a 10-year income tax holiday and 6 percent tax for a further 12 years and project capital goods to be exempt from import duties and value added tax.
Lake Leisure is a joint venture between Australian gaming tycoon James Packer and Sri Lankan entrepreneur Ravi Wijeratne's Rank Holdings.
It has committed to invest at least 350 million dollars in the project which will include "a minimum 400 room hotel with meeting and convention facilities, gaming activities, fine dining restaurants and other associated facilities," the government notice said.
The notice is issued under Sri Lanka's strategic investment law where special tax breaks are given to large projects. The incentives then have to be presented to parliament with cabinet approval.
Gaming revenues would be taxed at the "prevailing rate on gross collection" from customers excluding cost of incentives, discounts associated cost including taxes in attracting customers, the notice said.
Under a recent change to its betting and gaming levy law, Sri Lanka lifted value added tax on casino revenues and imposed a flat 5 percent tax, which critics say is probably among the lowest in the world.
Most Asian countries charge rates (with valued added tax included) on gaming revenues ranging from 20 to 39 percent, with the highest being in Macao where there is no income tax on gaming.
There was no mention of corporate tax on gaming revenues on the gazette. In a separate notice issued for a project by John Keells Holdings, gaming revenues were excluded from a tax holiday.
Sri Lanka is expecting to boost up market tourists with gaming resorts which analysts say will push up city hotel rates, but other support infrastructure are also needed.
Another large resort by Sri Lanka's John Keells Holdings has been given similar incentives.